LODGING SENTIMENT SOARS
The most recent Lodging Executives Sentiment Index (LESI) reached 89.5 — the highest LESI reading since the survey launched in June 2000. The mark compares to last month's reading of 82.4 and represents a robust jump from a year ago, when the index stood at 72.7.
The LESI present situation measure of 92.1 compares to 82.4 last month and 61.4 a year ago. The present situation index is at the highest point ever, except for August 2000 when it read at 97.4. The future business conditions index stands at 86.8 as compared to last month's 82.4 reading and 84.1 a year ago to date.
The LESI is a leading indicator based on opinions of lodging executives and shows the prevailing direction of change and the magnitude of change in the lodging industry. A LESI index reading greater than 50 indicates that the industry is generally expanding and below 50, the industry is generally declining. The distance from 50 is shows the strength of the expansion or decline of the lodging sector. RevForecast maintains the LESI.
While lodging executives continue to be generally optimistic toward future business conditions, their enthusiasm for future business expansion is somewhat tempered — a reversal of the norm, since the future situation index has always been higher than the present situation mark except for the period between June 2000 and March 2001. Nearly three-fourths of those surveyed expect business activity to be better in the next 12 months, while 26.3 percent of executives rate the current conditions as unchanged. No one questioned believes business conditions will be worse 12 months from now.
The Reservations Expectations Index, in which executives project rooms reservations over the next 12 months compared to the last 12 months, reads at 86.8 — slightly below last period's index reading of 88.6. Seventy-four percent of respondents feel their rooms reservations will increase over the next 12 months. No one projects a decrease in res volumes.
The current Lodging Employment Index rose significantly to 76.3 versus last month's reading of 61.8. The employment index asks lodging industry executives whether over the next 12 months they expect to 1) add the total number of non-management employees, 2) keep the number about the same or 3) reduce the total number. Sixty-three percent of those surveyed expect to add non-management employees over the next 12 months, while 26.3 percent plan to keep the number of non-management employees the same. Just 10.5 percent plan to reduce the number of non-management employees in the coming years.
The LESI Index follows the Institute of Supply Management's Index method of tracking leading indicators and satisfies the need for real-time information for executive decision making in the lodging industry.
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